By TIOL News Service

ALLAHABAD, OCT 06, 2015: THE appellant is a charitable society registered under the Societies Registration. One of its activities is, manufacturing of Satritha Herbal Shampoo and Neem Shampoo for supply to the Khadi and village industry. According to the appellant, the shampoo manufactured by them is eligible for exemption of duty as per Notification No.140/85-CE dated 5th May, 1983 as amended from time to time. On the other hand, the Central Excise department was classifying the said shampoo under Tariff Chapter subheading No.3305.99, Chapter 33 of the Central Excise Tariff Act, 1985. Since there was a dispute with regard to the classification of the product and the appellant was not agreeing to the stand of the department, the appellant accordingly, filed a declaration under Rule 173B of the Central Excise Rules, 1944 in the prescribed proforma , mentioning in the remarks column that they shall pay duty under protest under Rule 233B of the CE Rules, 1944. They also filed a separate letter with the Assistant Commissioner on 24.12.1996.

On 3.2.2000, the appellant filed an application for refund of the duty paid under protest. The refund claim was rejected on the ground that the same was barred by limitation and also on the ground of unjust enrichment. On appeal, the Commissioner (Appeals) held that the appellant had not followed the procedure under Rule 233B. The appeal against this order was rejected by the Tribunal. Hence the assessee is before the High Court.

After hearing both sides, the High Court held:

++ A perusal of Rule 233B indicates that where an assessee desires to pay duty under protest, he shall deliver to the proper officer a letter to this effect. No format of the letter has been prescribed and, therefore, the format of the letter has been left to the assessee. According to the appellant, a protest letter had been given and, therefore, they had complied with the necessary requirement as stipulated under Rule 233B of the Rules. On the other hand, the stand of the revenue is that the appellant has not followed the requirement of law as prescribed under Rule 233B of the Rules and, therefore, they are not entitled to claim any refund.

++ The contention of the respondents that the protest as envisaged under Rule 233B, should have been followed and the procedure prescribed under the said rule had not been followed cannot be accepted. The requirement of Rule 233B of the Rules cannot be construed in a narrow and hyper-technical manner. What is required is, that there has to be a protest in writing, which in the present case has been done. Rule 233B of the Rules is procedural in nature and cannot override or control the substantive provision of Section 11- B( 1) of the Act since no specific form of protest or format has been provided under the Rules. The appellant in its letter and in the declaration form had recorded his dissent and objection to the levy of duty, which was sufficient to term it as depositing the duty under protest.

++ The Tribunal and the departmental authorities have committed a manifest error in non-suiting the appellant's application for refund on the ground that no protest letter was filed in accordance with the procedure prescribed under Rule 233B of the Rules. Since the protest letter was filed by the appellant, the question of the application being barred by limitation under Section 11-B of the Act does not arise. The appeal is allowed by remanding the matter to decide the refund application on merits.

(See 2015-TIOL-2304-HC-ALL-CX)